News U Can Use November 06, 2015

Transcription

1 News U Can Use November 06, 2015

2 The Week that was 02 nd November to 06 th November Slide 2

3 Indian Economy Data from Nikkei Survey showed that India's manufacturing sector growth slipped further and touched a 22-month low in October, mainly due to a slower increase in new orders. The Nikkei India Manufacturing PMI, which is a composite monthly indicator of manufacturing performance, fell to 50.7 in October from 51.2 in September. A figure above 50 represents expansion while one below that means contraction. Results from a Nikkei survey showed that India's services sector activity touched an eightmonth high in October on the back of a significant rise in new business orders even as growth in manufacturing output eased. The Nikkei Business Activity index climbed to 53.2 in October from 51.3 in September. The seasonally-adjusted Nikkei India Composite PMI Output index, which maps both manufacturing and services sectors, rose to 52.6 in October from 51.5 in September helped by new businesses. Government data showed that infrastructure output grew at its fastest pace in four months on a yearly basis to 3.2% in September from 2.6% in August. This can be attributed to higher production of electricity and fertilizers, which grew by 10.8% and 18.1%, respectively. The overall cumulative growth in the period from April to September stood at 2.3%, which is less than half of 5.1% growth witnessed in the corresponding period of the previous year. Slide 3

4 Indian Equity Market Domestic Equity Market Indices Indices 06-Nov-15 1 Week Return YTD Return S&P BSE Sensex % -4.52% CNX Nifty Index % -3.98% S&P BSE Mid-Cap % 3.70% S&P BSE Small-Cap % -1.54% Source: MFI Explorer Ratios S&P BSE Sensex CNX Nifty S&P BSE Mid Cap S&P BSE Small Cap P/E P/B Dividend Yield Source: BSE, NSE Value as on Nov 06, 2015 NSE Advance/Decline Ratio Date Advances Declines Advance/Decline Ratio 02-Nov Nov Nov Nov Nov Source: NSE Domestic equity markets closed in red as investor sentiments dampened after final reading of a private survey showed that the country s manufacturing activities touched a nearly two-year low in October. Weak cues from Asian markets also hit domestic bourses after China's official manufacturing data contracted for the third straight month in October. Investor sentiments dampened further after the Fed Chief gave hints of a possible interest rate hike in December. However, the downside was restricted following encouraging core sector output data for September and after the country s service sector activities touched an eight-month high in October. Slide 4

5 Indian Equity Market (contd.) Sectoral Indices Indices Last Returns (in %) Closing 1-Wk 1-Mth S&P BSE Auto % 2.69% S&P BSE Bankex % -3.05% S&P BSE CD % 1.50% S&P BSE CG % -7.55% S&P BSE FMCG % -1.87% S&P BSE HC % -7.25% S&P BSE IT % -2.42% S&P BSE Metal % 0.12% S&P BSE Oil & Gas % 0.93% Source: Reuters Values as on Nov 06, 2015 Indian Derivatives Market Review On the BSE sectoral front, most of the indices closed in red. S&P BSE Healthcare was the major laggard, down 6.07%, followed by S&P BSE Capital Goods (- 2.74%) and S&P BSE Metal (-2.11%). S&P BSE Healthcare plunged after a major company from the sector witnessed huge selling pressure following a regulatory warning from the U.S. Meanwhile, S&P BSE Bankex fell by 1.40% on concerns over an imminent rate hike by the U.S. Fed. Nifty November 2015 Futures were at 7, points, a premium of points against the spot closing of 7, points. The turnover on NSE s Futures and Options segment fell to Rs lakh crore during the week ended November 6 from Rs lakh crore recorded in the previous week. The Put-Call ratio stood at 0.75, compared to the previous week s close of The Nifty Put-Call ratio stood at 0.83, compared to the previous week s close of Slide 5

6 Yield in % Domestic Debt Market Debt Indicators (Yield %) Current Value 1-Wk Ago 1-Mth Ago 6-Mth Ago Call Rate Day T-Bill % 2020, (5 Yr GOI) % 2025, (10 Yr GOI) Source: Reuters Values as on Nov 06, Yr Benchmark Bond ( % ) Bond yields fell initially during the week as investors resorted to value buying. However, the trend reversed and bond yields rose ahead of key U.S. jobs data for October, which is expected to provide clarity over interest outlook in the U.S. region. Investors also remained cautious about the outcome of Assembly elections Nov 3-Nov 4-Nov 5-Nov 6-Nov Source: CCIL The yield on the 10-year benchmark bond, 7.72% GS 2025, rose by 4 bps to close at 7.68% compared to the previous week s close of 7.64%. During the week, bond yields traded in the range of 7.61% to 7.69%. Slide 6

7 Yield in % Domestic Debt Market (Spread Analysis) Maturity G-Sec Yield (%) Corporate Yield (%) Spread bps 1 Year Year Year Year Source: Reuters Values as on Nov 06, 2015 India Yield Curve Shift (%) (W-o-W) Yield on Gilt Securities increased across the maturities by up to 4 bps barring 4- year paper that remained unchanged. Corporate Bond yields increased across the maturities in the range of 3 bps to 7 bps. The maximum increase was seen on 9 and 10-year maturities and the minimum on 1-year paper. Spread between AAA Corporate Bond and Gilt expanded across the maturities in the range of 2 bps to 4 bps, barring 1- year paper that contracted by 1 bps Source: Reuters 3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs Change in bps 06-Nov Oct Change in bps Slide 7

8 Regulatory Updates in India Capital market regulator Securities and Exchange Board of India (SEBI) has expressed concerns over a number of schemes floated by companies for illegal fund raising even after being barred to do so. SEBI cautioned investors and general public against dealing with such entities. SEBI in addition urged investors to report such unauthorized money pooling activities to the market regulator and state authorities along with appropriate details/documents. Capital market regulator Securities and Exchange Board of India (SEBI) said that companies will have to disclose all major regulatory actions and penalties along with details of price information of past issues handled by their merchant bankers in the shortened fivesheet abridged prospectus for public issues. SEBI further added that companies also need to make all important disclosures about its promoters and directors and objectives of the issue. According to SEBI, listed firms need to disclose details about their compliance with various social and governance requirements in a specified format. The business responsibility reports are mandatory for top 100-listed entities based on market capitalization at Bombay Stock Exchange and National Stock Exchange. Besides, listed firms need to make disclosure, within 48 hours of the board meeting, about the number of shareholders who attended such meeting and the mode of voting within the prescribed format. The new norms will come into effect from December 1. Slide 8

9 Regulatory Updates in India (contd..) According to capital market regulator Securities and Exchange Board of India (SEBI), listed companies issuing Indian Depository Receipt (IDR) will have to make disclosures about details of such shareholding within 15 days at the end of every quarter in a specified format. IDRs are instruments denominated in rupees which allow overseas companies to raise funds from the Indian market. SEBI further added that the procedure for partial two-way fungibility will be applicable for future IDR issuances as well as for the existing listed IDRs. Two-way fungibility implies that the IDRs can be converted into underlying equity shares and the underlying equity shares can be converted into IDRs. The Reserve Bank of India has issued operational guidelines for Sovereign Gold Bonds, , to be launched by the Prime Minister. Besides Sovereign Gold Bonds, the Prime Minister will also launch Gold Monetization Scheme and the Gold Coin and Bullion Scheme. The bonds will be issued on November 26. The Reserve Bank of India (RBI) has allowed domestic entities to conduct foreign currencyrupee swaps with multilateral agencies and allow hedging of loans. These swap transactions would have a minimum tenure of three years. The Central Bank added that the Government needs to be a shareholding member at the multilateral or international financial institutions for the swap to go through. Slide 9

10 Global News/Economy A report from the U.S. Labor Department showed that non-farm payroll employment jumped by 271,000 jobs in October following a downwardly revised increase of 137,000 jobs in September. The unemployment rate fell to 5.0% in October from 5.1% recorded in September. According to a Commerce Department report, the U.S. trade deficit narrowed to $40.8 billion in September from a revised $48.0 billion in August.. Survey results published by Caixin and Markit Economics showed that China's manufacturing sector continued to contract in October at the slowest pace in four months. The manufacturing PMI rose to 48.3 in October from 47.2 in September. The Bank of England (BoE) kept its policy rates unchanged at 0.50% and provided a dovish economic outlook, which dampened the prospect of an interest rate hike in the near term. The apex bank has downgraded the country s economic growth forecast. The bank expects inflation to remain below 1% until the second half of next year and is expected to return to the 2% target in around two years, the BoE added. Final data published by Markit showed that Euro zone manufacturing activity growth exceeded initial estimate in October. The PMI for the manufacturing sector rose to 52.3 in October from 52 in September. The reading was above the flash score of 52. Slide 10

11 Global Equity Markets Indices Global Indices Last Closing 1-Week Return YTD Return Dow Jones % 0.43% Nasdaq % 11.28% FTSE % -2.96% DAX Index % 12.53% Nikkei Average % 10.40% Straits Times % % Source: Reuters Values as on Nov 06, 2015 Europe U.S. The U.S. markets rose further after a report from the Institute for Supply Management showed manufacturing activities expanded slightly and upbeat jobs report in October. However, gains were restricted after the Fed Chief said that there is a room for interest rate hike in December if economic data supports such a move. European markets rose after Euro zone manufacturing activities expanded in October. Buying interest improved further after the European Central Bank President reiterated that additional stimulus measures may be announced, if required. Bourses gave up some of the gains later as the economic outlook from the Bank of England lowered the possibility of an interest rate hike in the near term. Asia Asian markets gained, tracking positive cues from the U.S. and European markets. Besides, concerns over China s economic slowdown eased after a private survey showed that activity in the country s services sector accelerated in October. Slide 11

12 Global Debt (U.S.) The 10-year U.S. Treasury bond yields rose for the third consecutive 2.35 US 10-Year Treasury Yield Movement week and surged by 18 bps to close at 2.33%, compared to the previous week s close of 2.15% Nov 3-Nov 4-Nov 5-Nov 6-Nov Source: Reuters The U.S. Treasury prices fell amid possibility that the U.S. Federal Reserve (Fed) might increase interest rates in December. Upbeat U.S. service sector and jobs data for October also weighed on Treasury prices. The downtrend continued after the Fed Chief in her testimony opined that the U.S. economy was performing well. This indicated that the Central Bank is well on track to raise interest rates in December. Slide 12

13 Global Commodity Prices Commodities Market Rebased to % Oct Oct-15 6-Nov-15 Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl) Source: Reuters Global Commodity Movement -4.71% -5.09% Performance of various commodities Commodities Last Closing 1-Week Ago Brent Crude($/Barrel) Gold ($/Oz) Gold (Rs/10 gm) Silver ($/Oz) Silver (Rs/Kg) Source: Reuters Values as on Nov 06, 2015 Gold Gold prices fell over the week as concerns over a possible rate hike by the U.S. Fed in December weighed on investor sentiments. Besides, fresh signs of weakness in the Chinese economy hit the demand outlook of the bullion. Crude Brent crude prices fell on persistent worries about future demand outlook from China. Oil prices witnessed more pressure due to concerns about oversupply after Gulf oil producers delayed some field maintenance until next year to keep production high. Baltic Dry Index The Baltic Dry Index fell during the week due to lower capesize and panamax activities. Slide 13

14 Currency Prices ( in terms of INR) Currencies Markets Rebased to % -0.17% Oct Oct-15 6-Nov-15 Source: RBI Currency Movement USD GBP Euro JPY Movement of Rupee vs Other Currencies Currency Last Closing 1-Wk Ago US Dollar Pound Sterling EURO JPY(per 100 Yen) % 0.87% Source: RBI Figures in INR, Values as on Nov 06, 2015 Rupee Euro The rupee weakened against the dollar, tracking losses in domestic equity markets. Weak Chinese manufacturing data for October and dollar demand from importers also weighed on the rupee. The euro plunged against the dollar after the U.S. jobs data for October came better than market expectations. The dollar rose further after the U.S. Federal Reserve Chief s testimony increased the possibility of a rate hike in December. Pound The pound plummeted against the dollar after the Bank of England kept interest rates on hold at its monetary policy review. Yen The yen weakened against the dollar after the U.S. Federal Reserve Chief s testimony increased the possibility of a rate hike in December. Slide 14

15 The Week that was 02 nd November to 06 th November Slide 15

16 The Week that was (Nov 2 Nov 6) Day Event Present Value Previous Value China Caixin Manufacturing PMI (Oct)Preliminary Monday, November 02, 2015 Euro Zone Markit Manufacturing PMI (Oct) U.S. ISM Manufacturing PMI (Oct) Tuesday, November 03, 2015 U.S. Factory Orders (MoM) (Sep) -1.00% -2.10% U.K. PMI Construction (Oct) Japan Markit Services PMI (Oct) Wednesday, November 04, 2015 China Caixin China Services PMI (Oct) Euro Zone Markit PMI Composite (Oct) U.S. ADP Employment Change (Oct) 182K 190K Euro Zone Retail Sales (MoM) (Sep) -0.10% 0.00% Thursday, November 05, 2015 U.S. Initial Jobless Claims (Oct 30) 276K 260K U.S. Nonfarm Productivity (Q3)Preliminary 1.60% 3.50% U.S. Nonfarm Payrolls (Oct) 271K 137K Friday, November 06, 2015 U.S. Unemployment Rate (Oct) 5.00% 5.10% U.K. Industrial Production (M-o-M) (Sep) -0.20% 0.90% Slide 16

17 The Week Ahead November 09 to November 13 Slide 17

18 The Week Ahead Day Event Monday, November 09 Germany Trade Balance s.a. (Sep) Euro Zone Sentix Investor Confidence (Nov) China Consumer Price Index (MoM) (Oct) Tuesday, November 10 China Producer Price Index (YoY) (Oct) U.S. Wholesale Inventories (Sep) China Retail Sales (YoY) (Oct) Wednesday, November 11 China Industrial Production (YoY) (Oct) U.K. ILO Unemployment Rate (3M) (Sep) Germany Consumer Price Index (MoM) (Oct) Thursday, November 12 Euro Zone Industrial Production s.a. (MoM) (Sep) India Index of Industrial Production (Sep) Euro Zone Gross Domestic Product s.a. (QoQ) (Q3) Preliminary Friday, November 13 Germany Gross Domestic Product s.a (QoQ) (Q3) Preliminary U.S. Retail Sales (MoM) (Oct) U.S. Producer Price Index (MoM) (Oct) Slide 18

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